1.  FINANCIAL STATEMENTS
 
 The financial statements are prepared under the historical cost basis
 and conform to generally accepted accounting practices and policies in
 India. These statements have been prepared in accordance with
 applicable mandatory Accounting Standards and relevant presentation
 requirements under the Companies Act, 1956 except specified otherwise.
 
 2.  BASIS OF ACCOUNTING
 
 Income and expenses are accounted for on accrual basis except the
 following which are recognised on cash basis:
 
 a) Claims for refund of excess insurance premium on open policies.
 
 b) Interest on loans to subsidiaries and on delayed payments of sales/
 trade finance where realization is doubtful.
 
 c) Export benefits.
 
 d) Interest realisable from the items handled on Government account.
 
 e) Dividend on investment.
 
 3.  USE OF ESTIMATES
 
 The presentation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual results and estimates are recognized in the period
 in which the results are known/ materialized.
 
 4.  TRANSACTIONS IN FOREIGN CURRENCIES
 
 a) Transactions denominated in foreign currencies are recorded at the
 exchange rate prevailing at the time of the transaction.
 
 b) All monetary items denominated in foreign currencies at the year-end
 are translated at year-end rates. In case of monetary items where the
 closing rate is unrealistic, translation rate is estimated based on
 past trend and expected realization/ disbursement.
 
 c) Non-monetary items other than fixed assets denominated in foreign
 currencies are reported on exchange rate at the transaction date. Fixed
 Assets are reported on exchange rate as at the transaction date as
 increased/reduced by the exchange difference arising on the
 corresponding foreign currency liability.
 
 d) Income or expense on account of exchange difference on settlement or
 translation is recognized in the Profit & Loss Account. Premium or
 Discount on forward exchange contracts is recognized on pro-rata basis
 with reference to the life of the forward contract except for forward
 covers taken at the behest of Business Associates, in which case the
 premium or discount is recognized at the inception of the forward
 exchange contract on matching principles since the corresponding
 transactions with the Associate are carried out based on the forward
 rate.
 
 5.  FIXED ASSETS
 
 Fixed Assets are stated at historical cost less accumulated
 depreciation and impairment.
 
 6.  INTANGIBLE ASSETS
 
 Cost incurred on Intangible assets, resulting in future economic
 benefits are capitalized as Intangible Assets and amortized on
 straight-line method beginning from the date of capitalization.
 
 7.  DEPRECIATION AND AMORTISATION
 
 Fixed Assets other than land are depreciated on straight-line method on
 pro-rata basis with reference to the month of acquisition/ disposal at
 rates approved by the Board of Directors based on technical evaluation
 of estimated useful life, which are equal to or higher than those
 provided in Schedule XIV to the Companies Act, 1956. Premium on
 Leasehold land is amortised over the lease period. Assets with
 cost/written down value at the beginning of the year upto Rs. 5000/-
 are depreciated at 100% retaining a nominal value of Re. 1/-.
 
 8.  IMPAIRMENT OF ASSETS
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value and impairment loss is charged to Profit
 and Loss account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting periods is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 9.  INVESTMENTS
 
 (i) Long term investments are carried at cost. When there is a decline
 (other than temporary) in the value of long term investments, the
 carrying amount is reduced to recognise the decline.
 
 (ii) Current investments are carried at the lower of cost and fair
 value.
 
 10.  INVENTORIES
 
 Inventories are carried at lower of cost and net realizable value. Cost
 is determined as (a) on weighted average method in respect of
 inventories pertaining to own business and items handled on govt.
 account under PDS or otherwise, (b) on actual cost as per specific
 identification method in respect of items handled on back to back
 arrangement with business associates. (c) Goods-in- transit valued at
 CIF cost. Cost includes cost of procurement (excluding element of
 self-insurance, if any), duties, taxes and cess and all direct and
 indirect costs incurred to bring the stocks to the condition as at the
 time of valuation. Net realizable value is the estimated price
 realizable in the ordinary course of business less further costs to be
 incurred for completing the sale.  Estimates of net realisable value
 are based on the most reliable evidence available at the time of
 estimation as to the amount the inventories are expected to realize and
 also take into consideration fluctuations of price or other factors
 affecting the realizable value including events occurring after balance
 sheet date to the extent that such events confirm the conditions
 existing at the balance sheet date.
 
 11.  COST OF SALES AND SALES
 
 a) Purchases and sales are recognised on the performance of contracts.
 
 b) In cases where contracts provide for crystallization of price or for
 price adjustment on a subsequent date, corresponding purchase and sales
 are booked on the basis of expected settlement price and any
 differential determined subsequently is accounted for at the time of
 final settlement. Cost of Sales and Sales are accounted for considering
 all costs and elements including usance interest on supplier''s credit
 as provided for in the contract and incurred till the date of
 recognition including expenses incurred by and surplus accruing to
 Associates as per contract terms.
 
 c) In respect of back-to-back / tripartite / joint-execution / third
 party arrangements, purchases and sales are booked on the basis of
 documents furnished by the Business Associate as adjusted for the fixed
 trade margin accruing to the Company.
 
 d) Sales include transactions under third party arrangements and
 counter-trade obligations met by exports through the Company.
 
 e) In case of dealings on behalf of the Government (including
 consignments under Government''s Gift / Grant Scheme), purchases and
 sales and incidental expenses or income thereof are accounted for under
 the respective head of accounts.  Surplus or deficit to Government
 Account, after adjusting service margin accruing to the Company, is
 adjusted in Cost of Sales or Trade Income respectively.
 
 12.  CLAIMS
 
 Claims are recognized in the Profit & Loss Account if there is no
 uncertainty relating to its ultimate realization. Claims recognized in
 Profit & Loss Account but subsequently becoming doubtful are provided
 for through the Profit & Loss Account.
 
 13.  SELF INSURANCE
 
 The Company covers certain commodities handled by it on selective basis
 under its self-insurance scheme. The surplus of premia realised to
 cover the risk of commodities over the related claims and reinsurance
 premia paid to outside agencies to cover the risk of claims is included
 under the head ''Other Income (Trade)''. No provision is made in respect
 of unexpired risks and claims are accounted as expenditure when
 reported.
 
 14.  EMPLOYEE BENEFITS
 
 a.  Short term employee benefits are recognized at their undiscounted
 amount in the accounting period in which they are incurred.
 
 b.  Employees benefit under defined contribution plan comprising
 provident fund, recognized based on the undiscounted obligation of the
 company to contribute to the plan. The same is paid to a fund
 administered through a separate trust.
 
 c.  Retirement Benefits:
 
 i) Company''s contributions to Gratuity Trust Fund and liability towards
 Leave Encashment and Half Pay Leave are provided on accrual basis.
 Gratuity, Leave Encashment and Half Pay Leave are determined on the
 basis of actuarial valuation undertaken as at the year end.
 
 ii) Liability towards Post-retirement Medical Benefits is provided
 based on actuarial valuation as at the year end.
 
 d.  Other Long Term Benefits:
 
 Other long term benefits i.e. Long Service Award are determined on the
 basis of actuarial valuation undertaken at the year end.
 
 e.  Termination Benefits:
 
 Retirement benefits under voluntary retirement scheme is written off in
 the year in which opted.
 
 15.  PROVISION FOR DOUBTFUL DEBTS
 
 Debtors, Loans and Advances wherever considered doubtful are fully
 provided for.
 
 16.  RESERVES
 
 a) Exchange Fluctuation Reserve represents exchange fluctuation gains
 on treasury operations set aside to meet future losses, if any.
 
 b) Export/Import Contingency Reserve is appropriated out of the profits
 to meet unforeseen losses in respect of export/import operations.
 
 17.  EXHIBITIONS AND FAIRS
 
 The cost of samples and other items acquired for various exhibitions
 and fairs in India and abroad are charged to revenue in the year in
 which incurred.
 
 18.  EXPENSES ON COMMON SERVICES
 
 Recovery of expenses in respect of certain common services between the
 Company and its erstwhile subsidiaries is based on turnover/contract
 concluded/occupancy/ utilisation of manpower as is considered
 appropriate to the nature of expense recovered.
 
 19.  BORROWING COSTS
 
 Borrowing costs attributable to acquisition or construction of
 qualifying assets upto the date the assets are ready for their intended
 use are capitalized as part of cost of such asset. All other borrowing
 costs are recognized as expense of the year in which incurred.
 
 20.  TAXES ON INCOME
 
 a) Current tax is provided on the basis of taxable income determined
 under the Income Tax Act, 1961.
 
 b) Deferred tax is recognised, subject to the consideration of
 prudence, on timing difference. Deferred Tax Assets and Liabilities are
 measured using tax rates and tax laws that have been enacted or
 substantively enacted by the Balance Sheet date.
 
 21.  CASH FLOW FROM OPERATING ACTIVITIES
 
 Cash Flows relating to trade finance provided by Business Associates or
 the Company for execution of trading contracts including utilization of
 the finance towards fixed deposits with banks for opening letters of
 credit in favour of suppliers and refund/ payment/recovery of interest
 thereon as per the terms of Contract are treated as part of Operating
 Activities.
 
 22.  PROVISONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS:
 
 Provisions are recognised for liabilities that can be measured only by
 using a substantial degree of estimation, if the following conditions
 are satisfied:
 
 i) The company has a present obligation as a result of past event,
 
 ii) A probable outflow of resources is expected to settle the
 obligation and
 
 iii) The amount of the obligation can be reliably estimated.
 
 Contingent liability is disclosed, if
 
 i) The company has a possible obligation as a result of past event,
 
 ii) The Probability of out flow of resources is not remote,
 
 iii) No reliable estimation of such obligation is possible.
 
 Contingent assets are neither recognized nor disclosed.
 
 Provisions, contingent liabilities and contingent assets are reviewed
 at each balance sheet date.